Statutory refund of business tax keeps its original character and is taxable as business income, not other sources.

A statutory refund of excess profits tax, including interest calculated under the refund provision, retained the character of the original business receipt and was not taxable as income from other sources; it was treated as business income under section 10 of the Income-tax Act, 1922. On the property issue, the earlier Full Bench ruling on the same parties and property was treated as controlling, and the assessee was held not to continue as owner for computation under section 9 of the Indian Income-tax Act, 1922.

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Issues: (i) Whether the refund of excess profits tax together with statutory interest was assessable as income from other sources or as business income under section 10 of the Income-tax Act, 1922; (ii) Whether the assessee continued to be the owner of the property for purposes of computation of income under section 9 of the Indian Income-tax Act, 1922.

Issue (i): Whether the refund of excess profits tax together with statutory interest was assessable as income from other sources or as business income under section 10 of the Income-tax Act, 1922.

Analysis: The refund under section 14A(7) of the Excess Profits Tax Act consisted of the excess tax paid together with interest calculated at a statutory rate, forming one consolidated repayment. The original payment was made out of business profits under compulsion of the taxing statute, and the statutory accretion attached to that amount could not be treated as a separate source of income. The receipt retained the same character as the original business profit when it came back to the assessee.

Conclusion: The amount was not assessable under the head "other sources" and fell within section 10 as business income, in favour of the assessee.

Issue (ii): Whether the assessee continued to be the owner of the property for purposes of computation of income under section 9 of the Indian Income-tax Act, 1922.

Analysis: The question was governed by the earlier Full Bench decision concerning the same property and parties. That decision was treated as fully covering the issue and required the conclusion that the assessee did not continue to be the owner for the relevant tax computation under section 9.

Conclusion: The assessee was not entitled to treat the property as continuing to vest in him for assessment under section 9, against the assessee.

Final Conclusion: The reference was answered partly in favour of the assessee and partly against him: the refund with statutory interest was taxable as business income, while the property-income issue was answered against continued ownership for tax computation.

Ratio Decidendi: A statutory refund of business-related tax, together with the interest or accretion mandated by the refund provision, retains the character of the original business receipt and is not converted into income from other sources merely because it is repaid by the revenue.

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